Author Tax Articles

How to Handle Royalty Income on Your US Tax Return

Start here: classify your royalties based on what you actually did, not the label on the payment. The IRS default is to report royalties on **Schedule E**, but if you are in business as a self-employed creator, such as a writer, inventor, or artist, the IRS directs you to **Schedule C** instead. That choice affects self-employment tax, expense treatment, and whether net self-employment earnings can support self-employed retirement contributions.